According to the U.S. Commerce Department, e-commerce currently makes up less than 5 percent of our country’s $4 trillion annual retail sales. By its very nature, search marketing has been devoted almost exclusively to e-commerce. However, a recent study from marketing firm RevTrax shows that paid search makes its biggest impact in offline sales.
The study, which was based on two years of research, revealed that “for every $1 of e-commerce revenue generated from paid search, marketers can expect to see approximately another $6 of in-store revenue.”
Tracking consumer behavior from online to offline has always posed a challenge for search marketers. However, the increased popularity of smartphones has made it easier to link offline behaviors with online incentives.
During the course of the study, which ran from August 2009 to August 2011, RevTrax monitored millions of paid search ads (and the resulting sales) for their retail clients. To ensure that the in-store sales were tracked accurately, RevTrax used landing pages and coupons with unique barcodes. When each coupon was redeemed in a brick and mortar store, RevTrax was able to track it back to the original online search.
Based on the data it collected, RevTrax was able to determine conclusively which in-store sales were brought about through paid search ads. According to the study:
- The average paid click generated $15 of in-store revenue, with some merchants seeing numbers as high as $28 per click.
- Approximately 9 percent of paid clicks resulted in an in-store sale, with some merchants seeing numbers as high as 26 percent.
But of course, the most surprising revelation was the fact that paid search is impacting offline sales over online sales by a factor of 6:1. Because of this, RevTrax insists that paid search advertisers who exclude in-store sales from their ROI could be “undervaluing the paid search channel by as much as 85 percent.”
Seth Sarelson, COO of RevTrax, wanted to make sure the results of the study were understood in their proper context. “[W]e’re talking about paid search only, not organic, so there’ s certainly no guarantee that a brand is at the top of the paid search results for any keywords in a particular category.”
He also pointed out that the study also demonstrated “that many clients are reporting that 40-50% of customers acquired via paid search were new. This is big as it shows that this isn’t just an example of existing customers searching on branded terms looking for a deal.”